The Online Privacy Debate

Companies that track and collect online consumer data give marketers the chance to serve up ads that are customized to an individual user’s wants, likes and needs. In theory this kind of marketing, called Behavioral Targeting (or BT) offers a win-win for consumers and marketers alike. Marketers get to save money by serving ads only to the best potential prospects and consumers are served ads that are highly relevant to them.

What allows this to happen is data collection. Cookies are stored on a user’s computer, or something called a PIE (persistent identification element) that cannot be easily deleted or detected. Tracking companies then assemble and analyze data in order to gain insight into patterns that marketers may want. And this is big business. According to Forrester Research, companies in the U.S. spend more than $2 billion on third-party consumer data each year. Add in dollars spent on market research and other kinds of derived information, and that number balloons even higher.

All of this has contributed to an ongoing and heated debate. Often people don’t like the idea of being followed and don’t want their information shared. And as the demand for mobile marketing and location data grows, concerns about data trackers that can follow digital footprints in real time are growing.

Proponents of industry regulation want to make sure “personally identifiable” data remains private. Opponents worry that implementation of such a law will be costly and inhibit Internet innovation. The debate ranges from “Privacy is dead . .. Get over it!” and “the appeal of online services is to broadcast personal information on purpose” to “Privacy protects us from abuses from people in power” and fears that data tracking will have a “chilling effect on our First and Fourth Amendment rights”.

In response to these concerns, some companies are trying to build a marketplace to help people decide how much data they want to share, and with who. Companies like Personal and Experian are attempting to give consumers deals and even cash in exchange for sharing their data. However, the prevailing perspective among online advertisers is that the current system can continue to support targeted advertising as long as the industry provides more transparency and tools for turning off tracking.

And the conversation continues. In the news this week is Google’s just announced new privacy policy. “Some have expressed concern about whether consumers can opt out of our updated privacy policy… We believe that the relevant issue is whether users have choices about how their data is collected and used,” wrote Pablo Chavez, Google’s director of public policy.

Representative Ed Markey, a senior member of the House Energy and Commerce Committee and co-chairman of the Congressional Privacy Caucus shot back in a statement,” Sharing users’ personal information across its products may make good business sense for Google, but it undermines privacy safeguards for consumers.